On Thursday, just over a year after winning the majority, Democrats in
the House of Representatives voted through an energy bill that
represents a stark departure from the administration's approach. It
would raise vehicle fuel efficiency (Cafe) standards for the first time
in over 30 years, by 40%, to 35 miles per gallon for both cars and
light trucks and SUVs. A renewable energy standard mandates that
utilities generate 15% of their power from renewables by 2020. It would
set a renewable fuel standard aiming to generate 36 billion gallons of
ethanol a year by 2022. A tax package would roll back some $13.5bn in
oil industry subsidies and tax breaks to help pay for $21bn worth of
investments in clean energy development, mainly in the form of
investment tax credits for wind and solar, along with the development
and purchase of plug-in hybrid vehicles. And it would raise efficiency
standards for appliances and buildings.

Let's look at a couple of pieces very quickly. Recognize that this is based on 10 whole minutes of research, far more than a busy Congressman could possibly be expected to muster.

They want 15% of power generation from renewables by 2020. I am not sure if this includes hydro. If it does, then a bunch of Pacific Northwest utilities already have this in the bag. But even if "renewable" includes hydro, hydro power will do nothing to meet this goal by 2020. I am not sure, given environmental concerns, if any major new hydro project will ever be permitted in the US again, and certainly not in a 10 year time frame. In fact, speaking of permitting, there is absolutely no way utilities could finance, permit, and construct 15% of the US electricity capacity by 2020 even if they started today. No. Way. By the way, as a sense of scale, after 35 years of subsidies and mandates, renewables (other than hydro) make up ... about .27% of US generation.

By the way, I am all for cutting all subsidies to any industry for any reason, but when they say "industry subsidies and tax breaks" for the oil industry, what they mostly mean is this:

These were leases for drilling rights in the Gulf of
Mexico signed between oil companies and the Clinton Administration's
Interior Department in 1998-99. At that time the world oil price had
fallen to as low as $10 a barrel and the contracts were signed without
a requirement of royalty payments if the price of oil rose above $35 a
barrel.

Interior's Inspector General investigated and found
that this standard royalty clause was omitted not because of any
conspiracy by big oil, but rather because of bureaucratic bungling in
the Clinton Administration. The same report found that a year after
these contracts were signed Chevron and other oil companies alerted
Interior to the absence of royalty fees, and that Interior replied that
the contracts should go forward nonetheless.

The companies have since invested billions of dollars
in the Gulf on the basis of those lease agreements, and only when the
price of oil surged to $70 a barrel did anyone start expressing outrage
that Big Oil was "cheating" taxpayers out of royalties. Some oil
companies have voluntarily offered to renegotiate these contracts. The
Democrats are now demanding that all these firms do so -- even though
the government signed binding contracts.

My hybrid Camry is right on the edge of that. It's a lovely car, but I can't see a bigger car or even an SUV getting close to that mileage.

Zach

"but I can't see a bigger car or even an SUV getting close to that mileage"
[sarcasm]
Haven't you heard? The auto companies have designs for 500 MPG SUV's but those big bad oil companies won't let them roll them out. Only our benevolent overl^WCongress-people can fix it for us. If it weren't for Congress, we'd still be driving in cars without seatbelts and air bags...

...or something...
[/sarcasm]

Craig

I love how Congress just pulls these numbers out of their collective rear. "Let's see, how about, oh, 35mpg?" "Sure, let's do, uh, 15% renewable." These numbers have no connection to reality.

Also, I think the renewable mandate excludes hydro.

CT_Yankee

Sometimes, when lawyers really make a mess out of representing thier clients, the courts order them to pay back all the money they were paid. It looks like the Fed owes the American citizens and taxpayers a refund of the Clinton Administration's salaries.

Jim

The permitting process is ludicrous for hydro. Here in Alaska we still have plenty of untapped potential but it takes at least a decade. Our town will have a new plant online next year. The permitting process took from '96 to '07, in spite of the absence of any fish runs at that location. Environmental groups opposed and delayed the project due to the "destruction" of 10 acres of habitat!

dearieme

35 mpg is easier in Britain because our "g" is bigger. But, seriously, modern diesel engines do give wonderful economy and good performance. I wouldn't think, though, that you could easily convert your refineries and distribution systems to cope with a predominantly diesel-powered car fleet on that time scale.

John Dewey

The 36 billion gallon ethanol requirement is just scary. How could the Congressional staffers not realize what this will do to food costs?

Didn't the former Soviet Union already try to plan how much product would be produced and set quotas for how product would be used? Why do these fools want to replicate their success?

Perhaps the difference is this number includes wood and wood waste generation (including black liquor recovery boilers which are used for process energy in paper plants.)

In any case, you are correct growth will not likely come from hydro. Not so much because of environmental issues, though I don't doubt those would exist. The point is largely moot because most of the vertical drop in our major rivers is already dammed. The laws of physics only allow you to capture the vertical drop of the water once.

If you look at what has been growing, it's only wind, which has grown from about 3000 kMWh in 1998 to a total of 30,000 kMWh.

The wind industry would need to grow by 8-10X in 13 years to meet the 15% goal. The wind turbine manufacturing industry is currently very stretched as it is. Also, this growth will require pushing into more and more marginal sites, requiring more turbines per MWh.

At some point, the intermittency of wind becomes a serious issue as well.

Jim K

3+ dollar a gallon gas is doing more to improve MPG standards than congress' silly mandates could ever do. Well done on kicking the U.S. auto companies in the groin while they are already down.
The ethanol boondoggle made me think of a NY Times editorial from last weekend bemoaning the fact that the 2008 Presidential election spending is projected to top $5bn and stating that "this amount of spending does not make economic sense." I had to laugh when I saw it, $5bn cost to control $2.4 trillion of potential favors for political allies and payoffs for votes (ethanol being a major one). Thats 21 basis points in total spending and (less of course for each candidate individually). Makes tremendous economic sense to me! Somebody needs to have the NY Times editorial board talk to some of the public choice economists over at George Mason (I can dream, can't I?)

I'm still annoyed at that damn Penn and Teller episode on hybrids where they bitch about not being able to fit everything you need for a picnic in a hatchback Prius. As a former Prius owner, I was greatly annoyed at the accusation that the cars were too small. But even with that, I can't see cars that are smaller taking off in popularity here. No matter how cute the Minis are.

dearieme

Xmas, tiny cars like the Nissan Micra can give 70 mpg with diesel. 35 mpg is easily got by Volvos, Mercs and so on.

TC

"How could the Congressional staffers not realize what this will do to food costs?"

Because they are still kiddlets wet behind the ears thinking they are actually being responsible and adult. It's very easy to see things differently from on high, especially when you just got out of US university! There exists a reason for the term, "Young and Dumb"!

I wonder what the MPG of that Prius would be towing 13,000#'s?

Penn and Teller are both funny and generally quite factual. You must have smaller picnics eh?

Oh and don't reelect anybody! EVER!!! If the people desire term limits, then it's the people that will have to enforce such. Don't send the lawyers back into a law making position!

Rufus

The house bill would cap corn-based ethanol at 20 Billion Gal/Yr. The Senate version at 15 Billion. After allowing for the substitution effect from Distillers Grains we will utilize between 22, and 30 Million Acres to meet these goals (this year we planted 91 Million Acres in Field Corn, and exported approx. 20% of that to be used, primarily, for livestock feed.)

BTW, for every $1 worth of corn we "Export" we have to "Import" $2 worth of Petroleum Products.

As for, "Food Costs," the cost of that $4.00 box of corn flakes went up approx. $0.02 as a result of the higher price of Field Corn. Petroleum prices affect the cost of food between two, and three times more than the cost of corn.

Gandalf

And the real answer is to build a whole mess of nuke plants and develop super batteries that make the plug-in car viable. Alternatively, if you realize that Global Cooling is actually the problem not Global Warming, start extracting and refining oil from domestic oil shale deposits and forget about the hokus of conserving ourselves to energy independence.

Kurt

How in the world do these geniuses hope to enforce their unreasonable and unworkable goals? If the power companies aren't producing 15% of their energy from renewable sources, what will happen? Will they be shut down or something? That will do our economy a world of good, I'm sure.

And with regard to ethanol, why does it even rate as a so-called green fuel? It has been shown before that ethanol production consumes more energy (and results in the production of more greenhouse gases) than the ethanol supposedly saves.

Dave Smith

Regarding non-hydro renewable mandates, the dirty little secret is that much of the electricity being counted as "renewable" is actually fossil power. Each wind energy contract has a little caveat in the fine print in which a backup source is required when the wind isn't blowing, and the backup sources are usually fossil. If you consider that at most wind energy complexes the wind is only effectively blowing 30% of the time, that means that 70% of the time fossil energy is being used to supplement the wind contracts.

I expect the same axiom exists with solar and biomass energy sources. Solar needs backup when the sun isn't shining, and many biomass generators are supplemented with coal, shredded tires, et al.

As for the sheer unadulterated stupidity of this current Congress, just remember it was the sheer unadulterated stupidity of the American voter who put them there.